Merrill Lynch reported net operating earnings of $2.4 billion for 2001 (all figures in US dollars), excluding the fourth quarter after-tax charge of $1.7 billion announced earlier this month and September 11-related expenses.

The full-year net operating earnings of $2.4 billion before the fourth-quarter charge and September 11th-related expenses were 37% lower than 2000. Including the charges, net earnings were $573 million for 2001.

Fourth quarter net earnings excluding the charge were $461 million. With the charge included, fourth quarter results were a loss of $1.3 billion, or $1.51 per share. The pre-tax profit margin for the full year was 16.9%, and the return on average common equity was approximately 11.7%.

“Although equity markets showed signs of stabilizing, the fourth quarter operating environment remained challenging,” said David Komansky, chairman and chief executive officer, and Stan O’Neal, president and chief operating officer. “While the pace of economic recovery remains uncertain, we are confident that the actions we are taking will yield substantial efficiencies, improve profit margins and enhance our competitive position globally. This will create operating leverage that will enable Merrill Lynch to benefit meaningfully from improvement in the market environment.”

Global Markets and Investment Banking faced a challenging market environment throughout 2001. Equity origination and trading activity declined, but now appear to be stabilizing. Global completed merger and acquisition volumes decreased throughout the year. Partially offsetting these factors were buoyant debt markets, as eleven interest rate cuts by the Federal Reserve were a catalyst for significant origination and trading activity during most of the year.

In the Private Client Group, full-year pre-tax operating earnings were $1.2 billion, down 21% from 2000. Full-year net revenues declined 15% to $10.1 billion due to lower transaction volumes and reduced demand for mutual fund and equity products, partially offset by an increase in net interest profit. The pre-tax operating margin was 12.2%.

Merrill Lynch’s full-time employees totalled 57,400 at the end of 2001. Financial advisor headcount totaled 16,400 at the end of the fourth quarter, compared with 18,000 at the end of the 2001 third quarter. This reduction in FAs occurred primarily wih the sale of the Canadian retail business.

A pre-tax charge of $2.2 billion was recorded during the fourth quarter, accounting for workforce reductions of approximately 9,000 through a combination of divestitures, voluntary separation and managed reductions. All of the reductions associated with the fourth-quarter charge have been completed or announced.